Judge voids Anaheim's $158 million tax deal

Dec. 10, 2012

Updated Aug. 21, 2013 1:17 p.m.

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Jose Moreno, president of Los Amigos of Orange County, and a plaintiff in a lawsuit against Anaheim over a $158 million tax subsidy, speaks at a protest in February. H. LORREN AU JR., REGISTER FILE PHOTO

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Joanne Sosa, a leader of Take Back Anaheim, speaks at a protest against a $158 million tax subsidy last February. H. LORREN AU JR., REGISTER FILE PHOTO

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Anaheim businessman and leader of Take Back Anaheim Larry Larsen speaks to protesters at City Hall at a protest in February. H. LORREN AU JR., REGISTER FILE PHOTO

Jose Moreno, president of Los Amigos of Orange County, and a plaintiff in a lawsuit against Anaheim over a $158 million tax subsidy, speaks at a protest in February. H. LORREN AU JR., REGISTER FILE PHOTO

ANAHEIM – A split vote on a tax subsidy worth up to $158 million to build two luxury hotels near Disneyland has been voided – leaving the future of the development plans in doubt.

Orange County Superior Court Judge Steven Perk ruled Monday that the City Council's 3-2 vote in January approving the tax subsidy was a violation of California's open-meeting law, known as the Brown Act.

The agenda for that meeting indicated there would be discussion of an existing economic-assistance agreement between the developer and the city, but it failed to adequately mention that action could be taken to amend the agreement.

"I think the judge's ruling is a pretty clear validation about what people from all segments of the community have been saying since that vote was taken – that it was not transparent and violated the trust of the people," said Eric Altman, executive director of Orange County Communities Organized for Responsible Development, one of the plaintiffs in a lawsuit against Anaheim challenging the validity of the vote.

Anaheim officials could either appeal the court's decision or bring the item back for a new vote.

"The city is disappointed in the court's ruling, and we will be evaluating our options," said Ruth Ruiz, an Anaheim spokeswoman.

Ruiz said council members will decide how the city responds to the judge's ruling.

Two new council members are scheduled to be sworn in tonight. Of the outgoing council members, Harry Sidhu voted in favor of the tax subsidy, while Lorri Galloway opposed it.

Incoming council member Jordan Brandman has expressed his support of the tax subsidy as good for the resort district and the city. If the council were to take a new vote, a majority likely would favor the tax subsidy.

Altman said he didn't want to speculate about what the new council might do. But he said he's encouraged that so many people throughout the city are now paying attention.

When the item came before the council Jan. 24, it passed with little discussion. The only public comments were from supporters.

But as word spread about the action, subsequent meetings were packed with outraged critics who called it an under-the-table "giveaway" of taxpayer money.

The contract would have allowed the developer to use the bed-tax generated by the hotels at GardenWalk – an outdoor mall near Disneyland – to pay for part of the construction costs.

Plans for the $283 million hotel project call for 866 four-star rooms. The city wouldn't provide any money up front.

Supporters, including the Chamber of Commerce, say that it would bring in millions of dollars on land that sits empty and generates no tax revenues.

The original vote sparked an organization called Take Back Anaheim, which collected thousands of signatures to overturn the council decision but failed to qualify a ballot initiative.

Joanne Sosa, who helped lead the effort, said on Monday: "We feel like Christmas has come early to the people of Anaheim. Their voice was heard after all."

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